- 1 Marks
Question
The following information relates to Owuro Enterprises:
| Item | N |
|---|---|
| Opening inventory | 124,000 |
| Closing inventory | 96,000 |
| Purchases | 2,972,100 |
| Profit margin is | 5% |
What is the gross profit for the period?
A. ₦119,555
B. ₦127,400
C. ₦150,005
D. ₦154,847
E. ₦157,900
Answer
Answer:
E. ₦157,900
Explanation:
Gross profit is calculated as the profit margin of 5% of the cost of goods sold (COGS). COGS = Opening inventory + Purchases – Closing inventory = ₦124,000 + ₦2,972,100 – ₦96,000 = ₦3,000,100. Gross profit = 5/95 * ₦3,000,100 = ₦157,900.
- Tags: Gross Profit, Inventory, Purchases
- Level: Level 1
- Topic: Financial Statements Preparation
- Series: MAY 2021
- Uploader: Kwame Aikins